“national debt”

3 Numbers: Why a U.S. Economic Meltdown is Inevitable

by Michael Fumento on April 5, 2011

in Economy

Post image for 3 Numbers: Why a U.S. Economic Meltdown is Inevitable
  • Amount Democrats argue should be cut from current budget to raise debt ceiling: $33 billion.
  • Amount Republicans argue should be cut: $61 billion.
  • Monthly increase in publicly held U.S. debt during past year (March to March): $139 billion.

We are a spendaholic nation of people who feel entitled; we will not change. Time to reread The Grapes of Wrath — or read it for the first time.

Obama Administration Understated Deficits by $2.3 Trillion; Resists Spending Cuts Needed to Stem Deficits

by Hans Bader on March 25, 2011

in Economy, Employment, Energy, Environment, Stimulus to Nowhere

The Congressional Budget Office reported last week that the Obama administration understated budget deficits “by more than $2.3 trillion over the upcoming decade,” and that “if Obama’s February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years — an average of almost $1 trillion a year.” President Obama objects to even a tiny two percent cut in the federal budget, submitting a self-indulgent, smoke-and-mirrors budget that would actually increase spending even faster than previously proposed for 2012.

Obama’s record deficit spending is based on the notion — contrary to all evidence — that if the government increases spending, that spending will more than pay for itself through increased economic growth. (Never mind that Canada’s economy boomed after it slashed government spending in the 1990’s, and America experienced an “economic boom” after our government slashed spending in 1946.)

For example, even though “federal education spending has gone through the roof” in recent years, Obama has called for big increases in education spending, saying that “the best economic policy is one that produces more college graduates.” But dumping more money on colleges won’t spur economic growth.

Jacking up college attendance rates further just results in the presence of bored, unmotivated students who are not interested in learning, and only go to college to get a diploma, while spawning an economically-destructive “arms race” over who can acquire the most unnecessary credentials. Already, “36%” of “the nation’s undergraduates” learn “little” or nothing after four years of college, according to a study cited by USA Today. Many of their professors didn’t even try to teach them much: “32% never took a course in a typical semester where they read more than 40 pages per week.”

[click to continue…]

The American Subsidy is Coming to an End

by Michael Fumento on January 28, 2011 · 1 comment

in Economy, Ethanol

Two items on the front page of yesterday’s Washington Post: “Record U.S. Deficit Projected this Year” and “Two lawmakers from Michigan propose billions in incentives for buyers of electric cars.” What’s wrong with this picture? That’s the problem. We don’t see anything wrong with this picture. We want it all. But we can’t have it all.

Some people think electric cars are nice, because the pollution they generate is off-site. But as Charles Lane, a liberal, writes: “If the cars were cheaper than gas-power cars of equal performance,” that would be one thing. “But electrics are substantially more expensive than cars of greater quality.” So we have to heavily subsidize them to get them out the door. On the other hand, gasoline-powered car owners are forced to use ethanol. That’s a subsidy to the everyone involved in the ethanol industry, and again it has to be subsidized because it’s inferior to gasoline. It cuts your mileage and does essentially nothing to reduce pollution. You just can’t go around subsidizing everything.

True enough, the main problem is entitlements. Which, not incidentally, are subsidies. Social Security, Medicare, and Medicaid already absorb 40 percent of the budget and grow inexorably without anybody casting a single vote to increase them. Left untouched, they will destroy the country. But earmarks are readily controllable and yet still uncontrolled.

Our nation has a spending addiction. And our politicians don’t have the guts to tell the public that no, we can’t have it all. And so we will continue to borrow and the Fed will continue to print money. In other words, subsidize the government so it can subsidize special interests.

But as Peter Orzag, Obama’s former budget director, writes in the Financial Times, “International investors would be wise to pay close attention to fiscal trends within the U.S.”  Don’t worry, they already are. And at some point, although it will be very costly to them, they will get nervous enough to stop subsiding our subsiding.

Orzag adds, “I hope it does not ultimately require a crisis to restore fiscal sustainability at the federal level, but I fear it will.” Indeed, it will. At some point, some point soon, it will all come crashing down.

Watch.

Andrew Sullivan Blames Tea Party for Budget-Busting Deal That He, Not It, Supported

by Hans Bader on January 21, 2011

in Deregulate to Stimulate, Economy, Employment, Politics as Usual, Sanctimony

The deficit is largely the result of “feel-good” bipartisan policies supported by the political establishment. But rather than taking credit for the deficit it helped to create, the liberal establishment blames it on political outsiders like the Tea Party who have little influence over public policy. Sometimes, the Tea Party is accused of supporting policies it had nothing to do with.

Writing at his blog at The Atlantic, liberal journalist Andrew Sullivan recently faulted the “Tea Party” for the recent budget-busting deal between Obama and congressional leaders that exploded the deficit by extending tax cuts, unemployment benefits, and government handouts: “immediately after the election, moreover, they did a deal borrowing a huge amount more and adding $700 billion to the debt.”

The irony is that Sullivan, one of Obama’s biggest cheerleaders, had earlier endorsed that very deal, a deal also endorsed by other liberal media like the Washington Post because of the government handouts it contained. In an explanation that was hard to follow, Sullivan said that this new “stimulus package financed by borrowing” would somehow create “the best context for serious reform” of the nation’s finances, providing a “big new stimulus” that would help Obama “as he moves toward re-election.”

By contrast, some Tea Partiers publicly opposed the deal. A Wall Street Journal article quotes a Tea Party activist and Senate candidate saying that “she decided to run after watching Congress pass legislation during this month’s lame duck session, including a package of tax cuts, that added to the national debt.”

Most Tea Party bloggers took no position on the deal. The few that did either opposed it or reluctantly supported it as the best one could expect from a government that would still be dominated by liberals in the next Congress (with Democrats controlling both the White House and the Senate).

I criticized the deal in a blog post that was reproduced at a blog called “Freedom Action“” that includes many Tea Party members. It drew no objections from any blogger or reader at that site (which has more than 300 members). I noted that the billions it will spend on extending unemployment benefits won’t stimulate the economy, but will financially burden states. 30-40 state unemployment funds are already insolvent or teetering on the edge, thanks to past federal extensions of unemployment benefits. Giving people unemployment benefits for years on end discourages people from taking lower-paying jobs, and results in some recipients gaming the system. It encourages people not to relocate in search of work, and not to take productive jobs that they think are beneath them, even if those jobs are the only jobs that they will realistically find once their jobless benefits come to an end, because of the disappearance of the type of job they once performed.

As the Heritage Foundation notes, “The consequences of extended unemployment benefits are some of the most conclusively established results in labor economic research. Extending either the amount or the duration of UI benefits increases the length of time that workers remain unemployed. UI benefits subsidize unemployment. They reduce the incentive unemployed workers have to search for new work and to make difficult choices–such as moving or switching industries–to begin a new job.” (The deal also contains other disincentives to work.)

Admittedly, the deal is not as economically-destructive as some of the measures that Obama previously pushed through Congress on party-line votes, such as the $800 billion stimulus package, which actually shrank the economy in several ways. (The stimulus used “green-jobs” subsidies to send American jobs overseas. 79 percent of those subsidies went to foreign firms, such as an Australian firm that imported Japanese wind turbines, effectively outsourcing American jobs. It also wiped out jobs in America’s export sector.)

“Nearly Two-Thirds of Americans Say the Stimulus Isn’t Working”

by Hans Bader on April 29, 2010

in Economy, Employment, Politics as Usual, Sanctimony, Stimulus to Nowhere

“Nearly two-thirds of Americans do not believe the $787 billion stimulus package the president passed last year has helped create jobs, according to a new Pew Research Center poll.”

As the Washington Examiner notes, “a recent survey of business economists showed they didn’t think the stimulus was creating jobs, either.”  President Obama falsely claimed that virtually all economists supported his stimulus package, but this was patently untrue at the time he made this claim, when at least 200 economists publicly opposed it, and it  is even more untrue now.

Obama falsely claimed that the $787 billion stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run”.  The stimulus package has since destroyed thousands of jobs in America’s export sector, and subsidized countless examples of government waste and corruption.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”

Nobel Prize-winning economist Gary Becker says that Obama’s policies are delaying economic recovery.

“How is stimulus money allocated? Unemployment isn’t a factor, but politics is,” found George Mason University researcher Veronique de Rugy in a recent study.

Districts where people are struggling and unemployment is high are not receiving any more money than those in which unemployment is low, even though a stated purpose of the $800 billion stimulus package was to help the unemployed.  But politics mattered in doling out federal funds.  And “Democratic districts also received two-and-a-half times more stimulus dollars than Republican districts.”

There are three trillion dollars in tax increases in Obama’s proposed budget, yet it would still borrow 42 cents on the dollar, resulting in colossal deficits.

Obama’s policies would raise the national debt by $9.7 trillion, noted the Congressional Budget Office.

Earlier, one of Obama’s own advisers worried that the “barrage of tax increases” in his budgets could harm the economy and prevent a “sustained” economic recovery.

In 2008, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Governors Criticize Health Care Bill for Increasing Unemployment and State Budget Deficits; Tax Increases and Medicare Cuts in Bill Rise

by Hans Bader on March 18, 2010

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Politics as Usual, Regulation, Sanctimony

Governors are now criticizing the health care bill backed by the Obama administration, saying it will cause health care costs and state deficits to skyrocket, while driving up unemployment.  Arizona Governor Janice Brewer said the bill would end up “exacerbating our state’s fiscal woes by billions of dollars.” Rhode Island’s Donald Carcieri said “this legislation is bad for Rhode Island, its taxpayers, seniors, and economy….This bill is not about health care. It’s about ideology and special interests.” Indiana’s Mitch Daniels said it would lead to insurance “premium increases ranging up to 78 percent,” “huge tax increases” for medical “device manufacturers” that employ many, and “job losses” and “a job killing tax of $2,000 per employee” that “will be levied on many companies.”

Earlier, Tennessee’s governor, Phil Bredesen (D), called the bill the “mother of all unfunded mandates,” saying it will force states to spend so much that they will have to either massively raise taxes, or run large budget deficits that violate state constitutions.

The health care bill has now been changed to add additional tax increases, such as increasing the tax on uninsured individuals by an extra $2 billion and on employers by $25 billion. Also added are new cuts to Medicare Advantage, increased by $13.7 billion (to $131.9 billion), and Medicare Advantage interactions, by $53 billion (to $70.4 billion).  This is according to the Congressional Budget Office.  But the CBO has cautioned that “the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft,” so there may be additional major changes that remain undisclosed until the House votes on the bill.

While the CBO has scored the health care bill as not increasing the federal deficit, thanks to the many tax increases in the bill, it has done so only by accepting many accounting gimmicks that even pro-Obama journalists have admitted are deceptive and conceal the bill’s enormous cost and the fact that it will massively increase the deficit.

Earlier, health care cost expert James C. Capretta explained how “Obamacare Is A Budgetary Disaster” that will cost at least $1.4 trillion more than promised.

The Congressional Budget Office, which refused to question Obama’s gimmicks to lowball the cost of his health care plan, nevertheless admits that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

There are $3,000,000,000,000 in tax increases in Obama’s budget.  But he’s spending money at such a furious pace that the deficit will skyrocket anyway: “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”  Obama recently ran up the largest budget deficit in history, by a huge margin.

ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, and break campaign promises.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

ObamaCare’s Enormous Cost Is Hidden by Dishonest Gimmicks, Says New York Times Columnist Who Supported Obama in 2008

by Hans Bader on March 14, 2010 · 6 comments

in Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

New York Times columnist David Brooks, like other columnists at that staunchly liberal newspaper, supported Obama in the 2008 election. But even he can now see that Obama’s health care plan is full of dishonest gimmicks that hide its enormous cost and the fact that it will drive up the deficit and health-care costs:

They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.

There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.

There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.

There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.

There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.

There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.

There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?

Earlier, health care cost expert James C. Capretta explained how “Obamacare Is A Budgetary Disaster” that will cost at least $1.4 trillion more than promised.

The Congressional Budget Office, which refused to question Obama’s gimmicks to lowball the cost of his health care plan, nevertheless admits that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

There are $3,000,000,000,000 in tax increases in Obama’s budget.  But he’s spending money at such a furious pace that the deficit will skyrocket anyway: “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

Obama’s healthcare plan will further increase deficits, as even Democrats have admitted.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

Obama recently ran up the largest budget deficit in history, by a huge margin.

The Hidden Costs of Health Care Reform: “Obamacare Is A Budgetary Disaster”

by Hans Bader on March 8, 2010 · 2 comments

in Health and Illness, Healthcare, Insurance, International, Legal, Nanny State, Personal Liberty, Politics as Usual, Precaution & Risk, Regulation, Sanctimony

The health care bills backed by President Obama will cost $2.3 trillion, not the $900 billion Obama claims, and will be a “budgetary disaster” that drives up the national debt, explains health care expert James C. Capretta.  The Obama administration managed to hide $1.4 trillion in costs generated by the health care reform bill though a series of budgetary “gimmicks” that the Congressional Budget Office (CBO) is required to treat as valid in scoring the bill’s enormous cost.

Although the CBO is low-balling the costs of ObamaCare, even it concedes that as a whole, “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”

ObamaCare spends money on frills like “cultural competency,” while cutting spending on crucial things like anesthesia.

Most Americans oppose the health care legislation backed by the president. It would reduce lifesaving medical innovation, raise taxes, drive up insurance premiums, break many campaign promises, and increase state budget deficits.  It  would jeopardize the quality of medical care, while imposing restrictions that failed when tried at the state level.  It ignores advice from doctors and federal experts, and lessons from countries with universal health care, about how to keep costs down.

Fact-checkers say Obama is lying about health care. Obama often contradicts himself. In the very same speech, Obama claimed that Medicare is “unsustainable” and “running out of money,” then contradicted himself by claiming that “Medicare is a government program that works really well,” making it a model for national health care.  The bill does nothing to curb massive waste and fraud in Medicare and Medicaid, even though it proposes to make massive cuts in Medicare (cuts so painful that most of them will never happen: year after year, Congress waives “the annual cut in fees paid by Medicare to physicians” mandated by an earlier law).

A CNN commentary noted that Obama’s plan would take away “5 freedoms,” contradicting Obama’s claim that the bill will leave you free to choose your doctor and keep your health care plan without government interference.

ObamaCare has also attracted criticism from groups like the Civil Rights Commission for containing both racial preferences and lower standards for treatment in predominantly-minority institutions, potentially harming both white applicants and minority patients.  This racial discrimination appears to violate court rulings like the Supreme Court’s Adarand decision, and the Rothe ruling by the Federal Circuit Court of Appeals.

Obama’s Policies Will Increase National Debt by $9.7 trillion, Says Congressional Budget Office

by Hans Bader on March 6, 2010 · 3 comments

in Economy, Environment, Health and Illness, Healthcare, Insurance, Legal, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere

“President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. . .The 10-year outlook by the nonpartisan Congressional Budget Office is somewhat gloomier than White House projections, which found that Obama’s policies would add $8.5 trillion to the debt by 2020.”

That’s from the an article in The Washington Post summarizing the findings of a recent report by the Congressional Budget Office.

As the Associated Press notes, “The deficit picture has turned alarmingly worse. . .Economists say that deficits of that size are unsustainable and could put upward pressure on interest rates, crowd out private investment in the economy and ultimately erode the nation’s standard of living.”

The President’s healthcare proposals will add still more to the national debt, which he is attempting to conceal through budget gimmicks.  Even Democrats have expressed alarm about their unaffordable cost.

In the 2008 campaign, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive increases in federal spending instead.  It’s one of a long series of broken promises by the President.

Obama broke his campaign promise not to raise taxes on anyone making less than $250,000 a year by signing a regressive SCHIP excise tax increase, and by proposing a cap-and-trade global-warming tax that could charge up to $2 trillion, a massive cost that Obama himself has said will be passed “on to consumers,” as well as homeowners and motorists. (In 2008, Obama privately admitted to the San Francisco Chronicle that if he was elected, electricity bills would “skyrocket” under his Administration, but it didn’t report that).

Obama broke seven campaign promises dealing with transparency and clean government in signing the $800 billion stimulus package.  Obama claimed the stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded before and after its passage that the stimulus package will actually cut the size of the economy in the long run.

Obama persists in pushing a government takeover of health care, event though most Americans oppose his plan. It would reduce lifesaving medical innovation, raise taxes, drive up insurance premiums and the deficit, break many campaign promises, and impose heavy burdens on state budgets.  It  would also jeopardize the quality of medical care for many, while imposing restrictions that failed when tried at the state level, and ignoring advice from federal and academic experts, and lessons from countries with universal healthcare, about how to keep costs down.

Obama recently nominated to a key federal appeals court a left-wing radical who seeks to make welfare a constitutional right, at taxpayer expense — a radical sometimes suggested as a future Supreme Court nominee.

On this day in 1835…

by Evan Banks on January 8, 2010 · 1 comment

in Culture, Odds & Ends, Zeitgeist

…the national debt was zero. Zero!

It was the only day in our nation’s history we’ve been out of the red. With debts incurred during the American Revolution and it’s aftermath, we started $75.4 million in the hole when the debt was first recorded in 1791.

Even adjusted for inflation, $75.4 million is a proverbial drop in the bucket compared to today’s debt, which is projected to be $14.46 trillion, according to whitehouse.gov (.pdf, page 128).  That’s 98.1 percent of the nation’s GDP, and would buy a lot of Hessian mercenaries back in 1791.

← Previous Entries